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4102.0 - Australian Social Trends, 1996  
Previous ISSUE Released at 11:30 AM (CANBERRA TIME) 24/06/1996   
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Contents >> Housing >> Housing Stock: Home ownership

Housing Stock: Home ownership

In 1994, 42% of households owned their homes outright and 28% were purchasing their homes.

Australia has one of the highest home ownership rates among OECD countries, with approximately 70% of households being owners or purchasers1. However, the rate of home ownership in Australia is not equally distributed across the states and territories, nor across different age groups, family types, or income groups. Whether a household owns, is purchasing or renting its dwelling is closely related to the life-cycle stage of its members.


Households

A reference person is the nominated partner in a couple family household; the parent in a one parent household; and the person in a lone person household. In other households it is an adult nominated by the household.

Outright owners are households where the reference person owns the home outright.

Purchasers are households where the reference person is paying off a loan or mortgage for the dwelling.

Public renters are households where the reference person rents from a State or Territory housing authority.

Other renters comprise private renters and other renters. Private renters are households where the reference person rents from a landlord who is a real estate agent or a person not in the same household. Other renters include households where the reference person rents from a landlord who is an employer (private or government), an owner/manager of a caravan park, or a housing cooperative/community/church group.

Recent first home buyers are households who purchased their first homes in the years 1992-94 and neither the reference person of the household, nor their partner, had owned a home previously in Australia.

Recent changeover buyers are households who purchased homes in the years 1992-94 and the reference person of the household, or their partner, had owned a home previously in Australia.


Housing tenure
In 1994, of the 6.8 million households in Australia, 42% were outright owners, 28% were purchasers, 6% were public renters and 21% were other renters. Over the previous one and a half decades the combined proportion of households who were outright owners or purchasers of their homes had been stable at approximately 70%. However, there was a shift in the respective proportions owning outright and purchasing. Between 1980 and 1994, the proportion of outright owners increased by 4 percentage points and the proportion of purchasers decreased by 5 percentage points. This partly reflects the overall ageing of the population, with households consisting of older people being more likely to own their homes outright.

Tenure type varies with population age structure and differences in housing affordability (see Population - State summary tables and Housing - State summary tables). Tasmania had the highest proportion of households who owned their homes outright (45%), reflecting both the older median age of its population (33 years) and also its more affordable housing. The Northern Territory had the lowest proportion of households who owned their homes outright (14%) and the youngest median age (28 years). More than half of the households in the Northern Territory rented their homes (52%), significantly higher than the national figure of 28%. 21% of households in the Northern Territory were public renters, reflecting the higher proportion of Indigenous households (see Housing conditions of Indigenous people). The Australian Capital Territory had the highest proportion of households purchasing their homes (36%), reflecting the relatively young median age (30 years) of its population.

TRENDS IN TENURE TYPE

1980
1990
1994
Tenure type
%
%
%

Outright owner
38.3
42.4
41.8
Purchaser
33.6
29.2
28.3
Public renter
4.8
5.8
6.2
Other renter
20.2
19.8
21.4
Other
3.1
2.8
2.2
Total
100.0
100.0
100.0

Source: Survey of Housing Occupancy and Costs (cat. no. 8724.0); Survey of Income & Housing Costs and Amenities (unpublished data); Australian Housing Survey: Selected Findings (cat. no. 4181.0).

HOUSEHOLD TENURE TYPE BY STATE, 1994

Outright owners
Purchasers
Public renters
Other renters
Other
Total
State
%
%
%
%
%
%

New South Wales
44.0
25.8
7.0
21.2
2.0
100.0
Victoria
44.3
30.1
3.7
20.0
2.0
100.0
Queensland
39.3
28.1
4.1
26.0
2.5
100.0
South Australia
41.1
28.5
11.2
16.6
2.6
100.0
Western Australia
37.7
32.0
6.3
21.6
2.4
100.0
Tasmania
45.2
25.4
7.3
18.7
3.4
100.0
Northern Territory
14.3
29.4
21.4
31.1
3.8*
100.0
Australian Capital Territory
28.1
36.2
12.8
21.8
1.0*
100.0
Australia
41.8
28.3
6.2
21.4
2.2
100.0

Source: Australian Housing Survey: Selected Findings (cat. no. 4181.0)


Life-cycle changes
In their late teens and early 20s people often leave the parental home and start renting. In 1994, 77% of households with a reference person aged 15-24 years were renting. By their mid 20s and 30s people are likely to start buying their first home and in 1994, 56% of recent first home buyer households had a reference person aged 25-34. By their 40s and 50s, many people have paid off their mortgage. In 1994, 50% of households with a reference person aged 45-54 years owned their homes outright. At age 65 and over, this had increased to 79%.

TENURE TYPE BY AGE OF HOUSEHOLD REFERENCE PERSON, 1994


Source: Australian Housing Survey (unpublished data).


Outright owners
Outright owners are generally older than purchasers and renters, reflecting the time taken to repay a housing loan. Many are in the later stages of the life-cycle and have children who have left home. In 1994, the median age of reference persons in outright owner households was 59 years. 81% of people who owned their homes outright were aged 45 or over.

Couple only households are more likely than other household types to own their homes. In 1994, 57% of couple only households owned their homes outright, compared to 37% of two parent households and 29% of one parent households.

Most outright owner households (90%) lived in separate houses, even though other types of housing made up 21% of the total housing stock.

Purchasers
Purchasers are in an earlier stage of the life-cycle than outright owners and many have children living at home. In 1994, the median age of reference persons who were purchasers was 39 years. Almost 50% of reference persons aged 35-44 years were purchasing a home. Over half (54%) of purchasers in 1994 were two parent households.

Of two parent households, 44% were purchasing their homes. In contrast, 20% of one parent households were purchasing and 49% were renting. This reflects the economic disadvantage of one parent households and the difficulty they may have in establishing themselves as purchasers.

Most purchasers (91%) were buying separate houses, but 5% were buying semidetached, row or terrace houses, or townhouses and 4% were buying flats, units, or apartments.

TENURE TYPE OF SELECTED HOUSEHOLD TYPES, 1994

Couple only household
Two parent household
One parent household
Lone person household
Other household
All households
Tenure type
%
%
%
%
%
%

Outright owners
56.6
36.8
28.8
45.9
24.9
41.8
Purchasers
24.1
44.3
20.2
15.0
19.7
28.3
Renters
17.8
17.4
49.1
34.9
52.9
27.6
Other
1.5
1.5
2.0
4.2
2.5
2.2
Total
100.0
100.0
100.0
100.0
100.0
100.0
Recent first home buyers
6.8
5.0
2.7
3.6
5.7
5.0
Recent changeover buyers

9.6
10.3
5.4
6.4
6.0
8.4

Source: Australian Housing Survey (unpublished data)


Dwellings

Separate houses are self-contained dwellings with access on all sides (at least one half metre). They include houses that have an attached flat.

Semidetached, row or terrace houses, or townhouses are dwellings with their own private grounds and no dwelling above or below. They are attached in some structural way, or separated by less than one half metre, to one or more neighbouring dwellings.

Flats, units or apartments include all self-contained dwellings in blocks of flats, units or apartments that usually share a common entrance. They include houses converted into flats and flats attached to houses.


Recent first home buyers
In 1994, 13% (895,000) of total households were recent home buyers. Of these, 37% (334,000) were first home buyers. Many Australians buy their first homes at an early stage in their lives. The median age of reference persons in recent first home buyer households in 1994 was 30 years. Over 70% were under 35, and 16% were under 25.

Recent first home buyer households in 1994 were most likely to consist of couple households, with or without children. 34% were couple only households and another 34% were couple households with dependent and/or non-dependant children. 16% of recent first home buyer households were lone person households and 5% were one parent households.

82% of recent first home buyer households purchased separate houses, 9% purchased semi-detached, row or terrace houses, or townhouses, and 9% purchased flats, units or apartments. The median price paid by recent first home buyers for separate houses was $106,000. 13% bought houses priced over $160,000. The majority of recent first home buyers were paying off a loan or mortgage for their dwellings. Only 11% bought their homes outright.

Almost two-thirds (63%) of recent first home buyer households had three bedrooms while 13% had four or more bedrooms. Slightly less than one-quarter (22%) had more than one bathroom. About three-quarters of recent first home buyers bought established dwellings.

Recent changeover buyers
In 1994, over half a million households, or 8% of all households, were recent changeover buyers. For many people, increasing age and the progression through the life-cycle means changing family or work arrangements and consequently different housing needs.

The median age of reference persons in recent changeover buyer households was 43 years. Recent changeover buyer households in 1994 were most likely to consist of couple households, with or without children. 28% were couple only households and another 42% were couple households with dependent and/or non-dependant children living at home. 17% of recent changeover buyer households were lone person households and 5% were one parent households.

The increasing affluence of many people through the life-cycle is reflected in the greater price paid by recent changeover buyers for their dwellings compared to recent first home buyers. Generally the changeover homes purchased are of higher quality than those purchased by first home buyers. 29% of recent changeover buyer households had four or more bedrooms and 43% had two or more bathrooms.

The median price paid by recent changeover buyers for all dwelling types was $134,000. This price is 26% higher than that paid by recent first home buyers for their homes. 32% of recent changeover buyers purchased new dwellings and 24% paid more than $185,000 for their homes. 35% of recent changeover buyers bought their new homes outright.

RECENT HOME BUYER HOUSEHOLDS, 1994

Recent first home buyer
Recent changeover buyer


New home
Established home
Total
New home
Established home
Total
Purchase price
%
%
%
%
%
%

$85,000 or less
22.5
30.9
28.7
15.4
16.4
16.1
$85,001-$110,000
33.8
26.5
28.3
18.8
16.4
17.2
$110,001-$135,000
23.2
16.4
18.1
16.2
17.5
17.1
$135,001-$160,000
11.3
11.2
11.2
15.3
13.2
13.9
$160,001-$185,000
4.4*
5.6
5.3
10.6
9.8
10.0
$185,001 and over
4.2*
9.0
7.8
22.0
24.2
23.5
Total(a)
100.0
100.0
100.0
100.0
100.0
100.0
'000
'000
'000
'000
'000
'000
Total recent home buyer households
85.5
248.7
334.2
176.8
383.6
560.3

(a) Includes purchase price not known.

Source: Australian Housing Survey: Selected Findings (cat. no. 4181.0)


Housing affordability
There is no single standard measure of housing affordability. One measure used in housing research is the ratio of housing costs to income2. Households can be considered to have affordability problems if they are in the lowest two income quintiles (each quintile contains 20% of total households ranked on household income) and spend more than 30% of their incomes on housing costs.

In 1994, 30% of households in the lowest quintile and 25% of households in the second quintile spent more than 30% of their gross weekly incomes on housing. However, within these two groups, housing affordability problems were not equally distributed across different tenure types.

14% of outright owners in the lowest quintile and 4% of outright owners in the second quintile spent more than 30% of their gross weekly incomes on housing. In contrast, over half of purchasers and about half of renters in the lowest two quintiles spent more than 30% of their gross weekly incomes on housing costs.

In the lowest and second quintiles recent changeover buyers experienced fewer housing affordability problems than recent first home buyers. 27% of recent changeover buyers in both the lowest and second quintiles spent over 30% of their gross weekly incomes on housing. In comparison over 50% of recent first home buyers in both the lowest and second quintiles spent over 30% of their gross weekly incomes on housing.

Housing affordability problems experienced by some purchasers may be voluntary. This is because purchasers may choose to pay off a mortgage that is difficult to service in the short-term, but which will ultimately result in the long-term advantage of outright ownership.

HOUSEHOLDS SPENDING MORE THAN 30% OF THEIR GROSS WEEKLY INCOMES ON HOUSING, 1994

Lowest quintile
2nd quintile
3rd quintile
4th quintile
Highest quintile
Total
Tenure type
%
%
%
%
%
%

Owner
14.3
3.7
1.0
0.2*
0.3*
4.9
Purchaser
66.3
56.1
38.9
17.5
7.5
26.1
Renter
50.7
42.5
11.0
4.3
0.9*
26.2
Total
30.2
25.2
16.0
8.3
3.7
16.7
Recent first home buyer
57.7
53.2
42.6
18.8
7.6
29.2
Recent changeover buyer
27.1
26.5
31.5
19.0
11.4
21.3

Source: Australian Housing Survey (unpublished data)


Endnotes
1 National Housing Strategy (1992) The Role of Home Ownership Background paper No. 10.

2 National Housing Strategy (1992) National Housing Strategy: summary of papers.



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